NN Group Insurance International Robin Spencer, CEO International Insurance Capital Markets Day 19 November 2015
Portfolio of mature and developing international markets Top 3 positions in CEE 1 life insurance and pensions Japan Leading player in Corporate Owned Life Insurance (COLI) 2 International businesses Organically built Trusted brand Large and professional distribution channels Cash generative Insurance Europe Significant upside potential: Recovering GDP Expected disposable income growth Markets remain underpenetrated Increasing gap of long term savings Japan Life Second largest life market in the world COLI segment accounts for 20% of life market 1. By APE (2013), includes Poland, Czech Republic, Bulgaria, Hungary, Romania, Slovakia, Baltics, Balkans, Russia, Ukraine and Turkey; Insurance Europe operates in all of these countries except for Russia, Ukraine, the Baltics and the Balkans; Source: NN Group 2. By APE (2014/2015) Internal estimate of NN Group 2
Strong contribution to NN Group results Operating Result International 9M15: EUR 281 mln 24% of NN Group ongoing business 1 Net Remittances International 9M15: EUR 367 mln 36% of NN Group net remittances Value New Business International 9M15: EUR 154 mln 96% of NN Group VNB (EUR mln) 133 148 Insurance Europe Japan Life (EUR mln) 150 Successfully managing the International businesses to maximise value and meet IPO commitments Key value drivers considered to be distribution, efficiency, product mix and innovation Clear strategy by market to drive value Strong leadership team with excellent delivery capabilities 74 142 Insurance Europe2 Japan Life 3 NN Re NL (incl. Japan CBVA) (EUR mln) 79 75 Insurance Europe Japan Life 1. Operating result before tax ongoing business 2. Refers to Insurance Europe entities consolidated totals excluding Czech Life insurance business (branch of NN Life) 3. Dividend payments of NN Re Netherlands legal entity are largely related to Japan Closed Block VA 3
Managing businesses for value Return on Equity 9M15 International Businesses 1 30% 25% 20% 15% 10% 5% Returns above Cost of Capital Returns below Cost of Capital ROE International Portfolio: ~10%⁵ 0% -5% -10% -15% Czech Republic² Slovakia Poland Hungary⁴ Bulgaria³ Romania Japan Life Spain Luxembourg Belgium Turkey Greece -20% Continue to Drive Profitable Growth Release Capital and Improve Value 1. Width of the bar represents adjusted equity; Greece has negative adjusted equity due to negative retained earnings 2. NN Czech is a branch of NN Life, risk capital held in the Netherlands is included in the calculation 3. NN Bulgaria is adjusted to a stand-alone status 4. NN Hungary eliminates NN Re equity and funding of Bulgarian Life business from equity 5. Average of international businesses of Insurance Europe and Japan Life as of 9M15 4
Insurance Europe 5
Insurance Europe has a strong footprint Top 3 positions 1 in CEE life insurance and pensions Businesses rebranded in 1H15 Strong market positions Significant distribution power via tied agents and banks Excellent customer experience EUR 15 bln pensions asset under management 10 mln customers 8,150 professional tied agents 10 bancassurance partnerships Subscale in some markets Traditional distribution channel Interest rates putting pressure on saving propositions 1. By APE (2013), includes Poland, Czech Republic, Bulgaria, Hungary, Romania, Slovakia, Baltics, Balkans, Russia, Ukraine and Turkey; Insurance Europe operates in all of these countries except for Russia, Ukraine, the Baltics and the Balkans; Source: NN Group All other figures as of 3Q15 6
Showing early signs of turnaround Target: Mid single digit operating result growth Net remittances 1 Improve return on equity 2 Grow Value New Business (EUR mln) (EUR mln) (EUR mln) 135 +10% 148 101 142 8.5% 9.8% 52 +43% 75 9M14 9M15 9M14 9M15 9M14 Disciplined cost, product and capital management driving financial metrics Continue to deliver IPO commitments 9M15 9M14 9M15 1. Net remittances exclude Czech Life insurance business (branch of NN Life). Polish Pension Fund remittances were at 80% until July 2015 when NN Group acquired the remaining 20% stake from ING Bank Slaski 2. Net operating ROE 7
Driving long-term value focusing on 4 strategic themes Disciplined capital allocation at a portfolio and product level 1 2 Driving high quality distribution, with ongoing focus on efficiency and quality 3 4 Growing through innovation in our markets Focus on delivering excellent customer experience All enabled through digital transformation of the businesses 8
1 Optimising our product propositions 1H15: 93 propositions 1 Number of propositions VNB Total: 97 Total: 93 20 33 44 26 16 51 Positive VNB Zero/Marginal VNB Negative VNB FY14 1H15 Value of New Business per Product Proposition Analysing and managing our business by individual product propositions to increase VNB Strong progress being achieved year-to-date 9
1 Improving VNB despite low interest rates VNB Development (EUR mln) Improvements in products and distribution have led to higher VNB +43% VNB Margin¹ improved from 2.3% to 3.0% Payback² period shortened from 9 years to 8 years 52 VNB 9M14-15 38 Market impact Management actions 75 VNB 9M15 Business mix improvements: shift to protection and capital light products Reducing new business expenses Renegotiating commissions Improving persistency 1. VNB Margin from 9M14 to 9M15 2. Payback from 1H14 to 1H15 10
2 Leveraging high quality distribution Strategic partnerships with 10 banks 35% of APE (up 2%) Professional financial advisors 42% of APE (up 2%) Selective cooperation with brokers 21% of APE (down 4%) Digital sales and servicing tools Customer intelligence, data analytics Improving productivity APE by channel for 9M15. Comparison with 9M14. Direct represents 2% 11
3 Growing through innovation in our markets NN has history of product innovation: right propositions tailored for local markets NN Hungary regained #1 position, market share up from 15.6% to 19.0%¹, and grew new business by 10%¹ Synergies across Europe MCPPI: Sales grew 14%² in Spain; Greece EUR 19 mln APE since launch in March Your Life Matters in Poland Életút: New modular protection product in Hungary MCPPI in Spain and Greece Launching Health in Romania 1. From 2Q14 to 2Q15 2. From 9M14 and 9M15 12
4 Improving Customer Experience Relational NPS ahead of competitors Retention rate improvements 2013 versus 2014 Digitalisation: 82% decrease in new business processing costs in Spain with paperless sales Digitalisation Net Promoter Score (NPS) in relation to main competitors Source: NN Group Global Brand Health Monitoring Survey, conducted by TNS, 2Q15 Relational NPS Question: How likely is it that you will recommend the company (or companies) below, of which you are a client, to family, friends or colleagues? (Life Business lines) 13
Strategic focus on profitable growth Strategic Focus Next 24 months 1 2 3 4 Disciplined capital allocation at a portfolio and product level Driving high quality distribution, with ongoing focus on efficiency and quality Growing through innovation in our markets Focus on delivering excellent customer experience Turnaround low return businesses Release capital from back books Capitalise on significant Tied Agent Network Grow our Bancassurance partnerships Continue to deliver tailored new propositions Launch long term savings solutions Digitalise customer touchpoints Leverage customer intelligence and data analytics Target: Mid-single digit operating result before tax annual growth rate on average 14
Japan Life 15
NN Life Japan built a large COLI business Japanese Life Market 1 : EUR 21 bln COLI segment ¹ : EUR 4.5 bln Leading COLI player EUR 10 bln Life Reserves Known for product innovation and superior service Long-lasting distribution relationships High barriers to entry 67,000 SME customers 5,000+ independent agencies 50+ bancassurance partners Pressure on investment margins Reduction in corporate tax rates 1. by APE, FY14, source: internal estimate All other figures as of 3Q15 16
Profitable, value creating and cash generative Target: Low-mid single digit operating result growth 1 (EUR mln) Cash generative (EUR mln) Improve return on equity 2 Writing Profitable New Business 1 (VNB, EUR mln) 0% -1% 132 132 79 78 90 74 9.8% 9.6% 9M14 9M15 9M14 9M15 9M14 9M15 Significant and sustainable contribution to NN Group s key financial metrics VNB broadly stable as impact of low interest rates was offset by management actions 9M14 9M15 1. At constant currencies 2. Net operating ROE 17
Product and distribution diversification strategy Distribution Diversification: Expand Bancassurance COLI Business Diversification: Expand COLI Protection APE 9M13 1 APE 9M15 1 VNB 9M13 1 VNB 9M15 1 6% 10% 13% 20% 94% 90% 87% 80% Bancassurance Independent Agencies COLI Protection COLI Financial Solutions 1. Related to COLI production only 2. Independent Agencies cover Insurance Professionals, Tax Accountants, Corporate Agencies, P&C brokers 18
Strategic focus on profitable growth Strategic Focus Next 24 months 1 2 3 4 Disciplined capital allocation at product level Driving high quality distribution, with ongoing focus on efficiency and quality Growing through innovation in our markets Focus on delivering excellent customer experience Move to more profitable products Diversify towards protection Continue to expand bancassurance Drive down cost-income ratio Deliver innovative COLI financial solutions and protection products Digitalise critical customer processes Superior customer advice via innovative e-training Target: Low to mid-single digit operating result before tax annual growth rate on average 19
Japan Closed Block VA 20
Japan Closed Block VA continues to release cash ~90% expected to have matured by end 2019 Liabilities are actively managed and hedged (EUR bln) +56 (166) +170 +44 +21 (53) 0.5 0.5 0.6 0.7 hedge result EUR mln Asset Liability -1.5-1.7-2.4-2.4-0.7-0.7-0.1-0.1 2010 2011 2012 2013 2014 9M15 Portfolio reinsured to NN Re in the Netherlands Expected capital release by end of 2019 EUR 0.7 bln plus or minus hedge results Hedge result is expected to remain volatile Secured the quality of hedging and the team by successful migration from Japan to the Netherlands 21
Key takeaways Insurance Europe 1 2 Japan Life 3 4 Organically built businesses leveraging significant distribution platform Grow profitability through disciplined capital allocation Top 3 player in large, structurally attractive COLI segment Focused on driving Value New Business through product innovation and expanding distribution Japan Closed Block VA 5 Japan Closed Block VA continues to release capital via NN Re Netherlands 22
1 Appendix: Insurance Europe leveraging on distribution platform
1 Insurance Europe leveraging on distribution platform Czech Republic Position Life: #4 # of TAs: 552 Belgium Position Life: #11 ING Bank Slovak Republic Position Life: #7 # of TAs: 348 Poland Position Life: #6 # of TAs: 1,685 ING Bank Hungary Position Life: #1 # of TAs: 1,111 4 BA partners Romania Position Life: #1 # of TAs: 1,419 ING Bank Bulgaria Position Life: #6 # of TAs: 380 Unica Bank Luxembourg Position Life: #20 ING Bank and 7 bank partners Spain Position Life: #11 # of TAs: 1,548 ING Direct Greece Position Life: #2 # of TAs: 1,023 Piraeus Bank Turkey Position Life: #14 ING Bank and Anadolu Bank # of tied agents as of 1Q15 24
Important legal information NN Group s Consolidated annual accounts are prepared in accordance with International Financial Reporting Standards as adopted by the European Union ( IFRS-EU ) and with Part 9 of Book 2 on the Dutch Civil Code. In preparing the financial information in this document, the same accounting principles are applied as in the NN Group N.V. condensed consolidated interim financial information for the period ended 30 June 2015. All figures in this document are unaudited. Small differences are possible in the tables due to rounding. Certain of the statements contained herein are not historical facts, including, without limitation, certain statements made of future expectations and other forward-looking statements that are based on management s current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. Actual results, performance or events may differ materially from those in such statements due to, without limitation: (1) changes in general economic conditions, in particular economic conditions in NN Group s core markets, (2) changes in performance of financial markets, including developing markets, (3) consequences of a potential (partial) break-up of the euro, (4) the implementation of the EC Restructuring Plan, (5) changes in the availability of, and costs associated with, sources of liquidity as well as conditions in the credit markets generally, (6) the frequency and severity of insured loss events, (7) changes affecting mortality and morbidity levels and trends, (8) changes affecting persistency levels, (9) changes affecting interest rate levels, (10) changes affecting currency exchange rates, (11) changes in investor, customer and policyholder behaviour, (12) changes in general competitive factors, (13) changes in laws and regulations, (14) changes in the policies of governments and/or regulatory authorities, (15) conclusions with regard to accounting assumptions and methodologies, (16) changes in ownership that could affect the future availability to us of net operating loss, net capital and built-in loss carry forwards, (17) changes in credit and financial strength ratings, (18) NN Group s ability to achieve projected operational synergies and (19) the other risks and uncertainties contained in recent public disclosures made by NN Group and/or related to NN Group. Any forward-looking statements made by or on behalf of NN Group speak only as of the date they are made, and, NN Group assumes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information or for any other reason. This document does not constitute an offer to sell, or a solicitation of an offer to purchase, any securities in the United States or any other jurisdiction. The securities of NN Group have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the Securities Act ), and may not be offered or sold within the United States absent registration or an applicable exemption from the registration requirements of the Securities Act. 25